On Thursday in the evening with Mr Anil and Archana we started for Airport. They left us at 10 o'clock on airport.
we got our luggage etc checked in and moved toward security check etc. Then waited for hours for the Austrian Flight.
Sharp at 1.55 A.M. The flight started which arrived at Vienna in The morning at 6.10 O'clock aCC. to Europe Time.
Our connecting flight was to start from Vienna to Munich at 6.00 hrs. The time taken for immigration check and security
check was in between. After we got all these cleared we went to terminal B26 from where our connectoing flight was to
start. Oh on enquiring from the officer sitting in security check Cab we could come to know that the flight has already
taken Off. Being quite new to the country and the Language problem we found ourselved in a state of what to do? We were also
worried about the fate of our luggage whether it has already gone in the flight or still at Vienna air port.
Under these circumstances we preffered it to inform Kamal for all this so that he may not be waiting at Munich airport for us.
Then we started another trial for further steps to be taken to reach Munich. Actually there were some other persons also
in the similar state thru which we could be consoled. We were told to take exit from the gate and to go to Service Centre of Austria.
We did not know the geography of airport so followed other. After travel a lot we could reach some C75 something and there we told
the whole story. After a good time in check from the system they told that next flight is already over crowded and we can go further
only in next to next flight that is at 1.00 noon of local time. She issued the free of charge
ticket but nodded no for our comfort and meals atc. Anyway we sighed a relief and again moved towards the point from where the flight
was to take Off.
Again we had to face Security Check. We tried to convince them that we had already gone through this check but they did not allow
and again we had to under go for severe check i.e. put off your all ornaments jewellery etc and we passed it and reached again
to B26. There were five long hours of wait. But it was god's grace that we had enough food in our hand bag. Both of us are
Diabetic and we have to take multitime foods. So First I asked my wife to take food. After we both finished it; there was still long
hours to pass. There was no alternative but to bear all this. Luckily I received a call from Archana who wanted to know about our
arrival in Munich at particular time. I narrated the whole episode to her. She made calls to Travel Agents and asked him how and why
it happened to her parents for nothing? She kept on doing telephone to know the status of every moment. All this gave us consolation
and courage of course in New Country. We tried to be normal but still some tension remained for luggage. That is from where we would
get it and from where we shall enquire in Munich as we had listened that munich is a very Biog airport. We had telephone from Seema
who said not to worry about luggage as it can be located through inf. On net also. This also consoled us a lot. Still there were hours to
pass. Every minutes after we were seeing to the clock hanging in the premises; besides we were also feeling sleepy as we could take
sleep in the plane. Chalo any way time passed and we could see sign of Flight to Munich 'Go to gate' This appeared at 12.20 and the check in
started a few minutes before 1.00 noon. We boarded the plane and had a sigh of relief and felt comfortable as the flight was Lufthansa.
Here we desire to mention that when we were boarding the plane we saw our luggage being loaded in the same plane. This gave us good relief.
Thank god we reached destination Munich. Here we proceed towards baggage claim and enquired regarding which conveyers would be having our
bags. She told 10 no. and we collected it from there and proceed to exit which is writtem as "ausgang,ausfahrt. Similarly in/ entry is called
called "einsgang & Einsfahrt" Kamal was there to receive us and we moved towards Home Sweet home. On the way we saw huge and beautiful buildings.
Very disciplined Traffic and clean roads. It was felt that the people are environmental conscience as there was no dust and other waste material
seen on any roads as we see in our country India. We reached Home Sweet Home and met Seema and children who offered us Welcome Cards. For I had left
India for the first time ; felt very good to see the love and respect from my children. This is all from Indian home to Home sweet Home in Munich.
Parents feel proud when they find their children on heights of achievements. We were feeling the same way.
2.APRIL 9. HOME SWEET HOME MUNICH: After reaching Seema's house we had a glace of her house from outside. The roofs are so slanting and beautiful
the reason was told that during Snowfall the ice comes down automatically. Seemas' house has six sleeping rooms all furnished with latest gadgets.
I personally liked the heating and Windows system in the house
which basically is hot water based pipes. It can be explained only through video and cannot be explained in writing. This is certainly a
better system in comparison to electric heaters etc. Very good bathrooms with neverseen gadgets in it, Three types opening of windows
the storage system in the basements, very beautiful flower plants of dif. colors in the yards and inside drawing room, wood work in the house
wood roofs automatic curtains on the windows,cleanliness in the house, temp control in the home, very good looking and well placed furniture all this things were clearly
proving that really we are in the deveolped country. Really I was impressed to see the heights of culture and rich living of the country. Here I
desire to narrate reg navigation system in the car. when Kamal met us in airport and we started for home ; he first adjusted the destination point
in his car ; the system which works thruogh satalite and guides you to reach your destination. This was new experience and a never seen before approach
of technology. The atmosphere is so clean, dust free here which can only be felt here itself. The clothes do not get dirty, no perspiration etc. hence you
can enjoy your own clothes for several days. As we were tired enough and a time lag between India and Germany of 3.30 hours we slept at seven of Germany.
3.10-11 APRIL Next day it was Saturday and supposed to be Off day so Kamal planned to take us to Switzerland for two nights and three days. Kamal hired one more car and got one hotel
booked in Luzern. We started from Munich to Luzern at 11.00 in the morning we reached there in two cars at 6.00 in the evening. I and Seema were in one car
Kamal Madam and children in other rented car. Here I would like to mention about the disciplined traffic. Inspite of being two lanes
the cars and other vehicles were running very smooth. There was no speed limit except at few curves/ tunnels etc. Seema drove the car at 150KMPH speed.
We covered the distance of 367 KM in just four hrs from Munich to Luzern. He had to pay fine because of language problem. After covering a distance of
app 170 KM we were stopped by the Austrian Police and they fined us 120 Euro each car for not paying Toll on the way. Actually the toll plaza was not found on the way rather
it was situated besides the highway which could not be judged. We checked in Hotel Falken The best part of it was that the hotel is it is situated in the centre of the city.
Every types of Shops , railway stations and spots to see, all were situated nearby. We had sightseeing, lakes and rivers, Railway stations, enjoyed different foods
and drinks of course along the river, had photo sessions, all around it was beauty and glamour everywhere. we were amaged to see the confidence among the Swiss people and the ladies.
All ladies and girls are of good heights and slim body with all confidence were roaming about with some one or the others. we found every resident and vistors in pleasant mood.
No tensions and signs of worry on any bodies face. We traced one restaurant Tandoori (Indian restaurant) had food and came back to hotel.The food was not
delicious to eat as the taste of eatables was diff. Kamal planned to leave for "Titlis Mountain" next day. We had a good sleep in the hotel.
Next morning we had breakfast in the room and planned to leave for TITLIS thru train after having information from the Railway Station. At 11.45 we left for
TITLIS and reached there after one hour. During way we had glimpses of Ice clad mountains , green land scapes, water falls etc.etc. At one place we experienced the
train was running on quite steep path. We had experienced this type of rail journey for first time. Overall we reached the destination. There we located the
start point of gandolas (ropeways) and got the ticket exchanged to ride in for upward journey to TITLIS peaks. The ticket we had purchased from Luzern @ 91 frank per person which includes
rail fare ,gandola charges and back to Luzern. We all rode in one Gandola, then the next rope way bus which took us to second heights, again we were
asked to ride in revolving type of closed round bus which took us to highest destination point. During the way we all enjoyed beautiful sceneries, land scapes etc.
on destination we found a very good open restaurant, bar, ice cream parlour, Bathroom facilities. We had snacks and enjoyed the snow all around. People of
Switzerland looks fond of skiing as most of families were seen doing it. Even children of 3, 4 years & old persons 75 years & above all enjoying it from steep
heights of snow mountains. It was really beautiful to see all this. Here we met several indian families also one from lucknow, Delhi, Andhra and
others part. To my surprise I would like to mention here that we found sign boards written in HINDI. This made us feel proud. After enjoying snow fall for two three hours we saw a sign board of Glacier Cave. We enjoyed this cave too. In this cave too there was a music system which covers national Anthem of only Six Countries and
what made us feel proud, ours was one of them. We switched it on and listened to our amusement and felt proud. this was already 4.00 evening. We started back as both
childs were under finger pain because we had forgotton there snow clothes at home and it was -17 deg C here. During downward journey we saw that heavy snow fall
has started, nothing was visible thru glasses of Gandolas. We had good photo sessions which are being put on face book.Our train started back from the station at 5.45
evening and reached Luzern after one hour. After it we searched for another Indian foods but could not suceed in. We took the help of internet on Steffni's laptop; the manager of the Hotel. She told reg KACHI Restaurant but it was very expensive. Still we went there having no alternative in hand. The food was good. We came back and slept in the Hotel for second night.
12 APRIL(MONDAY) After having breakfast , we had a round of markets where all brands of watch are available. We searched Buchere,Casagrande,Gublin etc.
Kamal purchased a watch of TISSOT Brand for 865 CHF. We had tea etc and some snacks and started for Munich. Seema had an idea of some Reinfall on the way.
So we all moved to see it on the way. The roads were thru mountains hence curved and steep somewhere, so Seema was finding it difficult to drive, still
she covered whole distance of its own. The way to Reinfall was via Zurich the capital of Switzerland. We saw the Zurich city on the way to reinfall. The distance was app 115 KM from Luzern. It was beautiful to see this fall. This was wonderful.To see the full view, we all had to go down at least 200 steps app 12 floors down. We had photo session, we had
boat ride to reach in the middle of fall. The Photoes have already been put on facebook. We drove back to Munich. On the way we had dinner and reached Home at 11.00 in the night. We all were tired and slept.
13-14 APRIL As it was working day, Kamal started for his office. On the way we returned the rented Car. Seema and me then went to "Real" bazar, Purchased
some household and came back to house. We all enjoyed the Company of children this day and on 14 as it was raining whole day we remained at home with children.
It ias really a good event of life to be with sachi and sonali both are so lovely and enchanting. Sachi when talks; fascinates every one, Soonali when speaks look so
charming. Sonali has an attractive personality thru her language and the way she speaks. It has been really wonderful to be with these two kids.
APRIL-15 We had bazar trip this day in Munich. On comparision we found everything very costly. Seema purchased a school bag for Sonali for 70 Euro.
Seema purchsed several household goods. The bazar we went to REAL and after noon in KAFFERIN thru Bus. On arrival of Kamal from office Seema planned
a trip to Autria Vienna for weekend. This is app 450 KM distance. Kamal hired a 9 seater Car @180+10 Euro to go to Austria. Booked Hotel in Vienna for two
Nights for 108 Euro per night. We had planned to leave on 16 April at 5.00 evening sharp. During the stay till now I would like to mention that Kamals' nature
is quite cool and amicable to all. In any circumstance he was not seen irritated as I am.
16-18 APRIL A TOUR TO VIENNA: As the nine seater was not available Kamal arranged one Seven Seater @ 245 Euro from 16 to Sunday Night. We started
at 4.30 sharp for Vienna and reached there at 9.30 in the hotel Cortina having a break of one hour in the way. The car was so eqipped with so many
gadgets like GPS System, Cruise System, Seats with arm rest and adjustable heights. GPS system "Global positioning System" Cruise System " You adjust the speed
and the car keeps on itself running on same speed in any types of road. This system is fitted on steering. To my surprise no horn was listened thrughout our
journey from any side inspite of two lane system. Hotel 'Cortina' one of very good hotel @ 108 Euro per night per room was eqipped with telephone, TV with remote
very good and airy room with heater and well eqipped bath rooms. Locker and frige furnished all types of alcohlic and other drinks. As we were late in the night
we having a glimpse of city during night went to sleep.
Morning having breakfast in the hotel we started for visiting the city thru Bus ' hop on hop off 'group of tours. This bus starts from Opera House Stop.
but it was very far off from our Hotel; we decided to leave for 'shornburn Palace'. This place we reached via Train which is for station distant. We had missed the 10.25 A.M. bus. We had two hours in between the next Bus. Kamal decided to have round of the Palace. We had a ride of Victoria all around the palace. The
beauty of the Palace can not be explained in writing. This can only be felt on visiting this place. It took us app two hurs to visit the beauty of this place.
We started towards the Bus which was due on 12.25 Noon. Actually the Bus of this group 'Hop on hop off' keeps on running thru tourists stop in the city after
a perticular period. the group has divided all tour spots in three catagory. You get off the Bus at ant spot , roam about and catch the second next bus on the same
whole ticket which cost 20 Euro per 24 hrs. Till Enenin 6.00 O'Clock we finished all catagorical spots. Then we started seeing the diff nearby already shown places on foot. We enjoyed a lot had photoes ,drinks, glimpses of beauty all aroun us. We realised that this city is really worth seeing and is famous throghout world.
We saw groups and groups of visitors. Rush of tourists at every place from diff parts of world. We moved on foot several KM. We had snacks/ coffee from the
world renowned 'Starbucks' chain outlet. It was really a good and healthy preparation. We tried to locate some Indian Restaurant for dinner but could not
succeed. Then we took some veg and non veg sandwitches and enjoyed the dinner after coming back to hotel. We returned to Hotel via train from Opera House station.
This is ten station far from Opera Station. The Hotel is app 1 KM away from Station. Durin night we could feel how safe it is here. None to disturb you. None to
stare at you. Every one in his own masti. We forgot the way to hotel on coming back then we had to travel on foot several kilometers. After all we cold reach hotel but fully exhausted. We slept a sound sleep.
SUNDAY 18 APRIL: After having breakfast we stated for PARATE WHICH IS IN THE CITY AND IS VERY GOOD PARK FOR CHILDREN AMUSEMENT.We till evening 3.00 O'Clock
enjoyed there in dioff. rides ,Swings and enjoyed drink and eatables. We started back for Munich and reached here at 8 evening. Here there is some Mehfil
Indian restaurant from where Kamal got Dinner which was very delicious to eat.
Saturday, May 1, 2010
Tuesday, September 1, 2009
Real Estate Investing Tips
Tips on investing in real estate
Introduction
I am a software engineer by profession but slowly I discovered that I am an entrepreneur by nature. In this blog I would cover how an average person with no background in real estate can make money in real estate. Like any other area this also needs some work and study to do. But I want to share my knowledge and experiences with you about it, so stay tuned, we will cover as much as we can
in every presentation blog post. Before starting I would also like to put a disclaimer that this is not a professional advice, I am just sharing my experiences with you. So please do your own research before you make any decisions. I am just trying to provide you some guidelines, guidelines that I used and I am by no means an expert. If you have questions about anything that I covered in this blog, feel free to write to me at seegupt@yahoo.com
Ways to invest in Real Estate
There are lot of ways of making money in real estate, I will cover few of them here.
a. Buying a Pocket Listings.
b. Buying a pre foreclosure that is in notice of default, but be aware that you do everything with ethics, some of the
states like california has very stringent rules for people who buy from people who are in notice of default.
c. Buying from an auction
d. Buying as an REO
f. Buying for a discount from owners by finding out from lawyers and accountants.
g. Buying disowned properties.(keep an eye in your neighborhood)
Long term buying, buying for a long term appreciation. If I buy anything for long term, my philosophy is that if I am putting my hard earned cash into something, it should give me something in return on a regular basis, monthly or quaterly.
Short term buying, buying a real estate for flipping is called short term buying and generally you make a short term capital gain on that.
Long Term & Short Term Gain
So what is long term and and short term capital gain, most of you must be aware of those things, but for those of you who don't know I will cover it here in simple words. Short term gain is an income that you earned within a short period of time and that short period of time is defined as one year time frame by the government. e.g. you bought a rundown house on 1st march and you fixed it with in a month and sold it and the deal got closed on 1st may and made some profit on this transaction. So time period of this complete transaction from buying to selling was two months, so the profit that you made on it was short term gain. Another example is stocks, say you bought some stocks so short term is always taxed on your tax bracket for that year. Suppose your total income for that year was X amt and which
including the income that you made through that real estate transaction or stock transaction, falls under the tax bracket of 30%, so you will pay 30% tax on that income also.
Long term capital gain. It is opposite of short term gain, but the tax rate on long term gain is 15% flat, which is a lot less because government want to promote this long term investing behaviour in people as it creates more stability in the market.
Making money in real estate if you don't have any
How to make money in real estate if you don't have money? So many times I hear people say that how can I make money when I don't have any. That is not true, I guess it's just about figuring out things. And I am a firm believer of the philosophy "where there is a will, there is a way"
So let me explain what I am talking about. I was working with a guy who did not have any money to buy real estate, but he was very good at finding good deals. What he used to do, he used to buy a property (just to conceal the identity of this friend of mine, we will call him Joe Wayne)as "Joe Wayne and/or Assignee". And then within the contigency period of the contract he would find an investor who has the resources to buy this property because it is a good deal and the investor looks at it as a way to make money. So Joe would assign his purchase contract to this investor and take an assignment fee. So now Joe made some quick cash without having any cash with him. Isn't that cool.
Where to invest in this market
As we all know that this is a bearish market and bearish market that noone has seen in last few decades. It all started with subprime lending. Lenders started giving loans to people who did not qualify and on top of that the loans were -vely amortized. But you making a long story short, so as a result of all that we are here.....global recession....
Prices of everything has gone down and the industry that was hit worse by this is where it all started, real estate. The prices of property have gone down tremendously. I guess they went down from 70-80% to 20% depending on the area.
It's not good for anyone. But every kind of market creates opportunities for those who are lookers who keep their eyes and ears open. This market created a lot of investors. Investors who were wise and didn't bet all of their hard earned money in stocks, they are coming out to buy discounted real estate.
So this is what people are doing right now, they are looking at their cash resources, if they have enough resources to grab couple of properties with 20-25% down payment(as the requirment has changed now for lenders, now they ask for 20-25% down payment and they are more stringent for investment properties. Do your calculations that after paying your down payment, can your rent from that property cover your mortgage, property tax and insurance and renter's insurance) and if answer is yes and it also gives some cash in your pocket then as per me it's a great buy.
Buying a SFR vs Townhome vs Condo
Should you buy a single family home, a condo or a townhome. So it all depends in what kind of market you are and also what is your long term or short term goal with your property purchase.
Buying a single family home should be your first choice in any kind of market and with any kind of goal, why because it's turn around time is quick. When you go to market to sell your house, the time it takes is very less, your target audience are more, most of the times there is no HOA in case of a single family. Now when you want to fix a property and flip it, your best bet is a single family house because you want to turn it around quickly, get a profit and get out quickly. And when the market starts changing or starts to go down, single family homes start getting effected in the end as opposed to townhome or condo.
But now if you are buying for long term, there are other factors that come into play. As I said earlier that your best bet is to buy single family only but you can say that buying a single family is expensive and it's not giving me +ve cash flow. In that case, you should look for other options, then look for a town home. Townhomes are not as good as a single Family but they are certainly better than condo. But if you think they also cannot produce +ve cash flow. So buying a condo should be your last resort. Because we are getting a good deal on every kind of house in this market so you know you can pretty much say that when the market goes up everyhing will go up, may not be by same percentage, but still made some money.
Protecting Your Assets
Protecting your personal assest from any lawsuit, now say you own a couple of rental properties in your own name that are giving you rental income and also some +ve cash flow. I know most of the times people are nice and with good conscience. But there are some bad ones also out there and say you got stuck with one of them as your renter, now something happens, e.g. a fire happened at the property and renter gets burnt and he knows that you are a guy with somewhat deep pockets and he can take some of your money, he will hire a good lawyer and file a lawsuit against you and the settlement amount is way more than what you bought that property for in the first place. Now what do you think will happen if that investment property was in your name. You guessed it right, your other personal assests are in danger. So I would recommend that first of all you form an LLC and then when you have renters, take renter's insurance and thirdly, buy liability insurance also for your LLC in case something happens. Based on your market and other situations make a judgement for how much amount you should buy the insurance for.
Building your own team
Now think if you have to buy a property who all you might need. First of all you need a real estate agent who can help you in the whole process of buying a property, then if that house needs fixing up, then you need a good team of contractors, slowly try to make a good team with help of your friend's or agent's referrals. And use them again and again in all your projects, they will be loyal to you and they will also give you good price to do the work. Once your house is all fixed up and needs to be rented out then you need a good property manager to help you in renting out the property.
Now some people say why do you need a property manager you can manage the property yourself. So I will say, hey good go ahead and do that if you have time, but if you are having another full time job or another full time profession/career and you are buying these properties on the side then hiring a property manager is a good option because as such your life is too busy, why do you want to increase more work for yourself, if you have a rental property, something or other will keep breaking in it in every couple of months. If you own a house you know exactly what I am talking about. Do you want your renter to call you at the middle of the night to tell you that flush of one of the toilets is not working and that needs to be fixed urgently and next day morning instead of going to do your regular work you are running around to get that fixed, I would say let someone else handle that for you and you sleep peacefully. My philosophy is that I am buying these properties to better my lifestyle, which means I want to create more money and more time for myself and if I don't hire a property manager and start doing the things that i said earlier than I am taking my current lifestyle also down the hill.
General
Now I will cover few general things, guys whatever you do, always have an attitude of abundance, if you missed a deal, don't think this was the last deal you could have gotten, if you made less money on a property because of any of your mistake don't keep dwelling on it thinking that this was my last deal and I could have made more. Always have an attitude of abundance. There is plenty for everyone in this world, it's just that we need to keep looking and if we keep looking with the right attitude, we will land in the right opportunity. Guys again, I am not an expert in any of the areas I talked to you about so far, so definitely do your own research before jumping into anything
and last but not the least, learn to trust your instincts.
If you have any questions, I would be more than happy to answer if I could. You can reach me at seegupt@yahoo.com
If out of your questions some topic comes up that I may not have covered here, I will do another blog to cover that.
Hope you enjoyed reading this blog and have fun investing and enrich your life and lives of people around you. You can do if I did it and I did not know even A of accounting, taxes or anything and I never even wanted to learn about those things, I was getting a pay check and that's about it.
Introduction
I am a software engineer by profession but slowly I discovered that I am an entrepreneur by nature. In this blog I would cover how an average person with no background in real estate can make money in real estate. Like any other area this also needs some work and study to do. But I want to share my knowledge and experiences with you about it, so stay tuned, we will cover as much as we can
in every presentation blog post. Before starting I would also like to put a disclaimer that this is not a professional advice, I am just sharing my experiences with you. So please do your own research before you make any decisions. I am just trying to provide you some guidelines, guidelines that I used and I am by no means an expert. If you have questions about anything that I covered in this blog, feel free to write to me at seegupt@yahoo.com
Ways to invest in Real Estate
There are lot of ways of making money in real estate, I will cover few of them here.
a. Buying a Pocket Listings.
b. Buying a pre foreclosure that is in notice of default, but be aware that you do everything with ethics, some of the
states like california has very stringent rules for people who buy from people who are in notice of default.
c. Buying from an auction
d. Buying as an REO
f. Buying for a discount from owners by finding out from lawyers and accountants.
g. Buying disowned properties.(keep an eye in your neighborhood)
Long term buying, buying for a long term appreciation. If I buy anything for long term, my philosophy is that if I am putting my hard earned cash into something, it should give me something in return on a regular basis, monthly or quaterly.
Short term buying, buying a real estate for flipping is called short term buying and generally you make a short term capital gain on that.
Long Term & Short Term Gain
So what is long term and and short term capital gain, most of you must be aware of those things, but for those of you who don't know I will cover it here in simple words. Short term gain is an income that you earned within a short period of time and that short period of time is defined as one year time frame by the government. e.g. you bought a rundown house on 1st march and you fixed it with in a month and sold it and the deal got closed on 1st may and made some profit on this transaction. So time period of this complete transaction from buying to selling was two months, so the profit that you made on it was short term gain. Another example is stocks, say you bought some stocks so short term is always taxed on your tax bracket for that year. Suppose your total income for that year was X amt and which
including the income that you made through that real estate transaction or stock transaction, falls under the tax bracket of 30%, so you will pay 30% tax on that income also.
Long term capital gain. It is opposite of short term gain, but the tax rate on long term gain is 15% flat, which is a lot less because government want to promote this long term investing behaviour in people as it creates more stability in the market.
Making money in real estate if you don't have any
How to make money in real estate if you don't have money? So many times I hear people say that how can I make money when I don't have any. That is not true, I guess it's just about figuring out things. And I am a firm believer of the philosophy "where there is a will, there is a way"
So let me explain what I am talking about. I was working with a guy who did not have any money to buy real estate, but he was very good at finding good deals. What he used to do, he used to buy a property (just to conceal the identity of this friend of mine, we will call him Joe Wayne)as "Joe Wayne and/or Assignee". And then within the contigency period of the contract he would find an investor who has the resources to buy this property because it is a good deal and the investor looks at it as a way to make money. So Joe would assign his purchase contract to this investor and take an assignment fee. So now Joe made some quick cash without having any cash with him. Isn't that cool.
Where to invest in this market
As we all know that this is a bearish market and bearish market that noone has seen in last few decades. It all started with subprime lending. Lenders started giving loans to people who did not qualify and on top of that the loans were -vely amortized. But you making a long story short, so as a result of all that we are here.....global recession....
Prices of everything has gone down and the industry that was hit worse by this is where it all started, real estate. The prices of property have gone down tremendously. I guess they went down from 70-80% to 20% depending on the area.
It's not good for anyone. But every kind of market creates opportunities for those who are lookers who keep their eyes and ears open. This market created a lot of investors. Investors who were wise and didn't bet all of their hard earned money in stocks, they are coming out to buy discounted real estate.
So this is what people are doing right now, they are looking at their cash resources, if they have enough resources to grab couple of properties with 20-25% down payment(as the requirment has changed now for lenders, now they ask for 20-25% down payment and they are more stringent for investment properties. Do your calculations that after paying your down payment, can your rent from that property cover your mortgage, property tax and insurance and renter's insurance) and if answer is yes and it also gives some cash in your pocket then as per me it's a great buy.
Buying a SFR vs Townhome vs Condo
Should you buy a single family home, a condo or a townhome. So it all depends in what kind of market you are and also what is your long term or short term goal with your property purchase.
Buying a single family home should be your first choice in any kind of market and with any kind of goal, why because it's turn around time is quick. When you go to market to sell your house, the time it takes is very less, your target audience are more, most of the times there is no HOA in case of a single family. Now when you want to fix a property and flip it, your best bet is a single family house because you want to turn it around quickly, get a profit and get out quickly. And when the market starts changing or starts to go down, single family homes start getting effected in the end as opposed to townhome or condo.
But now if you are buying for long term, there are other factors that come into play. As I said earlier that your best bet is to buy single family only but you can say that buying a single family is expensive and it's not giving me +ve cash flow. In that case, you should look for other options, then look for a town home. Townhomes are not as good as a single Family but they are certainly better than condo. But if you think they also cannot produce +ve cash flow. So buying a condo should be your last resort. Because we are getting a good deal on every kind of house in this market so you know you can pretty much say that when the market goes up everyhing will go up, may not be by same percentage, but still made some money.
Protecting Your Assets
Protecting your personal assest from any lawsuit, now say you own a couple of rental properties in your own name that are giving you rental income and also some +ve cash flow. I know most of the times people are nice and with good conscience. But there are some bad ones also out there and say you got stuck with one of them as your renter, now something happens, e.g. a fire happened at the property and renter gets burnt and he knows that you are a guy with somewhat deep pockets and he can take some of your money, he will hire a good lawyer and file a lawsuit against you and the settlement amount is way more than what you bought that property for in the first place. Now what do you think will happen if that investment property was in your name. You guessed it right, your other personal assests are in danger. So I would recommend that first of all you form an LLC and then when you have renters, take renter's insurance and thirdly, buy liability insurance also for your LLC in case something happens. Based on your market and other situations make a judgement for how much amount you should buy the insurance for.
Building your own team
Now think if you have to buy a property who all you might need. First of all you need a real estate agent who can help you in the whole process of buying a property, then if that house needs fixing up, then you need a good team of contractors, slowly try to make a good team with help of your friend's or agent's referrals. And use them again and again in all your projects, they will be loyal to you and they will also give you good price to do the work. Once your house is all fixed up and needs to be rented out then you need a good property manager to help you in renting out the property.
Now some people say why do you need a property manager you can manage the property yourself. So I will say, hey good go ahead and do that if you have time, but if you are having another full time job or another full time profession/career and you are buying these properties on the side then hiring a property manager is a good option because as such your life is too busy, why do you want to increase more work for yourself, if you have a rental property, something or other will keep breaking in it in every couple of months. If you own a house you know exactly what I am talking about. Do you want your renter to call you at the middle of the night to tell you that flush of one of the toilets is not working and that needs to be fixed urgently and next day morning instead of going to do your regular work you are running around to get that fixed, I would say let someone else handle that for you and you sleep peacefully. My philosophy is that I am buying these properties to better my lifestyle, which means I want to create more money and more time for myself and if I don't hire a property manager and start doing the things that i said earlier than I am taking my current lifestyle also down the hill.
General
Now I will cover few general things, guys whatever you do, always have an attitude of abundance, if you missed a deal, don't think this was the last deal you could have gotten, if you made less money on a property because of any of your mistake don't keep dwelling on it thinking that this was my last deal and I could have made more. Always have an attitude of abundance. There is plenty for everyone in this world, it's just that we need to keep looking and if we keep looking with the right attitude, we will land in the right opportunity. Guys again, I am not an expert in any of the areas I talked to you about so far, so definitely do your own research before jumping into anything
and last but not the least, learn to trust your instincts.
If you have any questions, I would be more than happy to answer if I could. You can reach me at seegupt@yahoo.com
If out of your questions some topic comes up that I may not have covered here, I will do another blog to cover that.
Hope you enjoyed reading this blog and have fun investing and enrich your life and lives of people around you. You can do if I did it and I did not know even A of accounting, taxes or anything and I never even wanted to learn about those things, I was getting a pay check and that's about it.
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